Start with the right list.

• Author: Turner, Jim
• Position: Direct Mail Essentials - Brief Article

One key to successful direct mail campaigns is ensuring you are targeting potential customers with the right list. Most direct marketers believe the list itself typically accounts for more than 50 percent of the campaign's effectiveness. Other factors such as the offer, sales copy, graphics and format (postcard, envelope and so forth) certainly affect response rates, but the list is most important because of its dominant influence and low cost.

Direct mail is one of the most expensive media, typically costing between $350 and $1,000 per thousand. Most lists, depending on source, quality and the selections used, cost only $20 to $75 per thousand. So, while accounting for the majority of the response, lists usually account for 15 percent or less of the total mailing expense.

Thus, if you identify the right target audience and remove those unlikely to respond, and can reduce your list by half, the rest of your costs are also cut by half because you're saving on production, printing and postage costs.

Banks are fortunate in that consumers' use of financial services is highly correlated to identifiable demographics and psychographics (or lifestyle) characteristics. Technology has made available very accurate lists and the ability to target with pinpoint effectiveness.

For financial services companies, the most productive list selections usually involve such factors as income, age, home ownership and value, net worth and, of course, geography. Here are examples:

Deposit products: If you're using direct mail to build deposits, your lists for certificates of deposit can be based on age categories of perhaps 40 to 50 and above. Income, of course, is a less reliable predictor for certificates because seniors, as the most likely users, also have lower incomes as retirees. But when selling money market accounts, you may be more effective in targeting higher income and somewhat younger households. And, savings accounts cross a wider range of incomes and are widely used by households with children.

Credit products: When promoting home equity credit, see if lists are available in your market based on mortgage deeds showing first and second mortgages, their balance and even interest rate. If such lists are not available...